RI lawmakers worried about secret talks to rewrite pension law

October 15th, 2013 at 5:00 am by under Nesi's Notes

By Ted Nesi

PROVIDENCE, R.I. (WPRI) – There’s growing anxiety among Rhode Island lawmakers about secret court-ordered talks between state leaders and public-sector unions, who appear to be closing in on a deal that will change the state’s landmark 2011 pension law significantly.

The uncertainty emerged last week after House Democrats discussed the pension talks at a closed-door caucus in West Greenwich. Rank-and-file lawmakers were addressed separately by Gov. Lincoln Chafee and Treasurer Gina Raimondo, who were ordered into mediation by Superior Court Judge Sarah Taft-Carter in a bid to settle the unions’ suit challenging the law.

“I’m very concerned with opening that whole debate again because it’s already been debated,” Rep. Jared Nunes, D-Coventry, told WPRI.com. “No matter where you stood on that, as far as a legislator is concerned, whether you stood on the side of the state employees or stood on the side of the taxpayers, you got that thing jammed down your throat.”

“They’re out of their minds,” added Nunes, who did not attend the caucus himself.

Taft-Carter has imposed a gag order on Chafee, Raimondo and everyone else directly involved in the pension negotiations. But members of the General Assembly are not party to the talks.

Multiple lawmakers who attended the caucus refused to say if Chafee told them he will need to ask for extra money in his proposed 2014-15 state budget next January to cover increased spending on pensions. State leaders are already facing a projected shortfall of roughly $170 million in the budget.

“It was a closed meeting and the things that they discussed are best kept in that room,” Chafee spokeswoman Christine Hunsinger told WPRI.com. “It’s way too early to know exactly what form the budget will take. Obviously, there are many decisions that will need to be made.”

The final version of the pension law, known as the Rhode Island Retirement Security Act, suspended benefit increases for roughly two decades and transitioned employees into a hybrid plan that includes a 401k-style defined-contribution account. The changes slashed the state’s long-term unfunded pension liability from $7.3 billion to $4.3 billion, and lowered the state’s last annual pension contribution from roughly $400 million to $242 million, according to Raimondo’s office.

Rep. Michael Marcello, D-Scituate, acknowledged the proposed pension deal may raise costs for taxpayers starting next year. “It is clear that negotiations are continuing and that there is a potential that any settlement may have an increased cost from a budgetary perspective,” he told WPRI.com.

Marcello said lawmakers were not given any timeline of when a possible settlement is expected to be finalized, and expressed frustration about the lack of information being shared with lawmakers.

“We’re all in the dark, and from my perspective I am concerned – from an institutional perspective – about a court kind of bootstrapping or telling the legislature what to do,” he said. “To me, there’s a huge separation-of-powers issue. … I’m not happy about the fact that the settlement is being done behind closed doors after having sat through all those previous [pension] hearings.”

“There’s no question in my mind we don’t have to approve any settlement,” he added. “We do not have to do it.”

Rep. Arthur Handy, D-Cranston, said the discussion of the settlement at the caucus was “very thin on details,” which left a number of his colleagues “anxious” about what’s coming down the pike.

“The fact that people are so unable to tell us anything makes you – it’s like the thing where somebody says, ‘I can’t tell you about it now’ – you really start to worry that there’s something there,” Handy told WPRI.com.

There are signs a settlement may be coming together.

Lawyers are scheduled to brief Taft-Carter on the progress of their talks for a ninth time later this month, and in August a union leader revealed that the plaintiffs have formed a subcommittee to communicate with workers and retirees about the terms of a settlement. Raimondo, meanwhile, is expected to run for governor next year.

Handy said a key question is how legislators would be expected to handle a draft settlement once it was given to them for their approval by Chafee, Raimondo and the unions. “The struggle would be, can we make changes?” he said. “If a judge says, ‘This is what you need to do,’ obviously we’re still the legislature. We still have that power to do what we need to do.”

“But on the other hand, does it completely upend and start everything over again if we don’t do exactly word for word?” Handy continued. “That’s where my uncertainty is right now.”

House Minority Leader Brian Newberry, R-North Smithfield, who is a lawyer, questioned why Taft-Carter ordered the executive branch to negotiate a settlement that needs the legislative branch’s approval.

“The first and most fundamental condition to a successful mediation is that the people with the power to decide the issue and agree to a binding arrangement be in the room and central to the negotiations,” Newberry told Anchor Rising last month. “That is clearly not happening with this ongoing mediation process.”

Nunes recalled that he drafted three possible amendments to the original 2011 pension bill but was told not to introduce them because “we can’t change this – we already had negotiations, we’ve already done due diligence, this is the way it has to be.”

“Don’t come back a year later or two years later and say, no, we had second thoughts, now we’re going to renegotiate this,” he said. “Don’t tell me we can’t change it and then come back two years later and tell us, no, we can’t change it again.”

“This is why we have separation of powers,” Nunes said. “The judiciary cannot force the legislative branch to change a law that was already enacted. Unless it was unconstitutional and has already been ruled, the judiciary cannot force us to change a law. … The judiciary, short of ruling the thing unconstitutional and striking down the entire law, can’t force us to change a law through negotiations.”

Despite his own concerns, Nunes said he expects House Speaker Gordon Fox and Senate President M. Teresa Paiva Weed will be able to cobble together enough votes to win approval of any pension settlement reached by Chafee, Raimondo and the unions. But Fox himself has expressed concerns about reopening the debate.

“If there’s changes, to what degree and and what [do] the variables look like, and what does it do to erode those savings, and who pays the price?” Fox said on WPRI 12′s Newsmakers last month. “If it comes back to the House and the Senate it’s not going to be about, ‘Let’s review what their settlement might be’ – you reopen the whole pension. It’s a law.”

“We’re not at the table negotiating this, nor should we be, but once you reopen the pension, you reopen it all,” he said.

Fox, D-Providence, emphasized that any settlement which comes out of the mediation process would be subject to change by the 113 elected lawmakers.

“Every representative has a right to put an amendment in,” Fox said. “Every representative has a right to demand that we do anything. And how do you stop them without me looking like the imperial speaker who says, ‘All we can vote on is this’? How do you control that? Nor should you control it, because that’s what democracy details.”

“So there’s a lot of anxiety over it, and we’re not part of it,” he said. “There’s a gag order, so I don’t know what terms they’re talking about.” Legislators would need to review the financial impact of the changes, as well, he said, adding that it “is not a simple exercise.”

Other lawmakers said the debate over any proposed settlement would give the General Assembly an opportunity to revisit the pension changes made in 2011, and potentially craft a better law.

“I think those of us who were there when it passed, that immediate feeling of ‘I hope I never have to go through that again’ is the preeminent one,” Rep. Teresa Tanzi, D-Narragansett, told WPRI.com. “But I think the reality is there are some improvements, if there are settlements to be had, that I would like to see included.”

Tanzi said she hoped lawmakers would “look for opportunities to kind of bring those lower-end individuals to be able to receive their COLA [cost-of-living adjustment] benefits earlier than those who were the higher earners,” suggesting pensions worth less than $35,000 annually as a possible cutoff.

At the same time, Tanzi also expressed uncertainty about how much scope there will be for lawmakers to make changes once a settlement is reached. “If this is a negotiated settlement then the two sides have come together, so how much leeway do we really have and how much is justifiable to advocate for beyond that?” she asked.

Rep. Spencer Dickinson, D-South Kingstown, said among his Democratic colleagues at last week’s caucus, “the sentiment was, we’ve dealt with this, we hope we don’t see it again on the floor.” But, he said, “That wouldn’t necessarily be my sentiment.”

Dickinson suggested a compromise could be to adjust the size of pension benefits based on the measured increase in the cost-of-living since the year a retiree stopped working, with a focus on pensions worth up to somewhere between $30,000 and $50,000 a year.

“If you retired in 1990, look at year 2013, see what in 23 years has changed, the value of the dollar in 1990, and get [the same purchasing power] 23 years later in 2013,” he said.

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi’s Notes blog. Follow him on Twitter: @tednesi

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12 Responses to “RI lawmakers worried about secret talks to rewrite pension law”

  1. charles r says:

    It really does not make a difference what they settle on, if the money is not there its not there. They can’t raise taxes, we already have the highest individual tax burden in the country . I would suggest that anyone that is counting on a government pension should make alternate plans. If the state does not change its financial direction the middle class private sector tax payers will continue to move out of state and in the end they pay the bulk of the taxes
    that pay for these benefits.

  2. William Berube says:

    Charles – Of course it matters what the settlement is. Between 38 Studio’s and all the other discretionary spending the GA has been involved in throughout the years it’s obvious the money is there, it’s just being spent on other things. And your suggestion that anyone counting on a government pension should make alternate plans is ludicrous – what about all those about to retire, those already retired, and those who are retired and physically disabled?

    It’s obvious by the way this court case is going that the COLA’s will be reinstated at a much earlier point than the treasurers 18 year time frame, so might I make a suggestion to you? Start packing!

  3. Bob says:

    won’t end well for us non-govt working peasants who should happily support the uppercrust like we did back in the feudal days.

  4. John O says:

    The state of RI has millions if not hundreds of millions in assets that are sitting idle or underutilized, ie Quonset point, unused land around the state and options to sell or develop such sites. The mishandling / corruption that has gone on for decades in RI similarly has cost taxpayers millions / hundreds of millions of dollars. Before courts accept at face value the Treasurer’s representation that nothing short of her plan to slash COLA’s would be necessary to justify breaking clearly contractual agreements, a forensic audit would be required to see where the money went and is going. The General Assembly members may fall in line like sheep at the scare tactics employed by Gina but the courts are required to do due diligence and open the books. Do you think the endless hiring of six figure consultants, law firms affiliated with General Assembly members and overall political patronage comes for free?

  5. Bob says:

    so dingaling john is suggesting RI have a garage sell to keep those illegal pensions flowing.
    I nor anyone I know signed any contract with that high of a cola or retirements in their 40′s so stop with the contractual agreement yap. Heck, I never even seen the contract so I feel no obligation to pay.
    Go chase the politicians who signed off on such foolishness and make them pay.

    1. bentat says:

      So you’ve decided they’re “illegal” Bob? No, sorry, quite legal. And you think you and every citizen has to sign every agreement the state enters into, or it’s invalid? If you feel you have no obligation to pay, then stop paying taxes. Then you can tell the judge when you’re hauled into court, “heck,I never even seen it”. Then you can tell him to “stop with the yap”. Should go well. You won’t even need a lawyer with your eloquence….

      1. Bob says:

        I do avoid taxes. I buy online, keep a beater car, keep my property dumpy on the outside and buy gas in Mass. when I can.

      2. sewqan says:

        Great. Don’t forget to also brag to the judge about your tax evasion, grampa….

  6. John O says:

    Bob

    Your verbal skills say all there is to say of your intellect. “I never seen…” oh well

  7. charles r says:

    John O… what do you do when you run out of assets. I agree the the state is poorly managed and slippery. This is common place in states that are primarily run by dems. I don’t see that changing.

  8. John O says:

    Charles,

    I am not suggesting selling off valuable state assets like Quonset . Rather the development there is capable of dramatic financial positive impact to the state of RI. Not all state property is as valuable as Quonset , yet could have potential financial benefit to the state if sold to private developers . There are thousands of acres of surplus land owned by the state that could be put to private development and result in taxes, jobs and increased economic activity. Some areas that come to mind are waterfront properties on the Bay, areas adjacent to state colleges, and former state institutions no longer in use. As far as financial mismanagement, it’s not unique to one political party in this state.

  9. Jim Donahue says:

    Yeah, throw a few hundred million more into developing Quonset. The West Bay needs to be subsidized some more.